Free Memorandum in Support of Motion - District Court of Connecticut - Connecticut

Case 3:03-cv-01014-JBA Document 78-2 Filed 12/16/2004 Page 1 of 4
LEXSEE 2002 CONN SUPER LEXIS 660
Pitney Bowes Credit Corporation v. Escotel Software, Inc.
CV010183438
SUPERIOR COURT OF CONNECTICUT, JUDICIAL DISTRICT OF
STAMFORD-NORWALK, AT STAMFORD
2002 Conn. Super. LEXIS 660
March 7, 2002, Decided
March 7, 2002, Filed
NOTICE: [*1] THIS DECISION IS UNREPORTED equipment, which had been manufactured by Pitney
AND MAY BE SUBJECT TO FURTHER APPELLATE Bowes, Inc. at its Danbury plant. The equipment was
REVIEW. COUNSEL IS CAUTIONED TO MAKE AN installed at the defendant’s place of business in Norwalk
INDEPENDENT DETERMINATION OF THE on or about November 16, 1997. The purpose of the
STATUS OF THIS CASE. machine was to stuff bills from telephone companies into
envelopes. The plaintiff further alleges that the defendant
LexisNexis(R) Headnotes was obliged to make approximately four years of
monthly lease payments to the plaintiff but had failed to
do so after January 20, 1998, and that the plaintiff was
JUDGES: William B. Lewis, Judge. owed approximately S 80,000, plus late charges of 4%
for overdue payment, interest of 12% per year, and
OPINIONBY: William B. Lewis attorneys fees, as provided in the written lease
agreement. The defendant made the required 30%
OPINION: MEMORANDUM OF DECISION advance lease payment, but did not make any additional
monthly payments.
This proceeding is an application by the plaintiff, Pitney
Bowes Credit Corporation, for a prejudgment remedy The agreement also provided that if any monthly
pursuant to General Statutes § 52-2780 seeking to attach payments were not made, the entire balance of the lease
sufficient property to secure the sum of $ 150,000. This could be accelerated at the option of the plaintiff The
case arises from an equipment finance lease (finance plaintiff exercised this right as of September 10, 1999.
lease) between the plaintiff as lessor and the defendant,
Escotel Software, Inc., as lessee. The plaintiff is a On June 18, 2001 and August 8, 2001 the parties were
subsidiary of Pitney Bowes, Inc., the manufacturer or present in court for a prejudgment attachment hearing,
vendor of the equipment in issue. In reality, the mailing pursuant to General Statutes § 52-2 78a' [*3] . The
machine was purchased by the plaintiff from Pitney standard for the granting of a prejudgment remedy by
Bowes, Inc. and then leased to the defendant, which way of an attachment is well established. "lf the court,
would become the owner thereof if all the conditions of upon consideration of the facts before it and taking into
the lease had been fulfilled. account any defenses, counterclaims or set-offs, claims
of exemption and claims of adequate insurance, finds
In its affidavit dated March 23, 2001, in support of an that the plaintiff has shown probable cause that such a
attachment and its unsigned complaint, the plaintiff judgment will be rendered in the matter in the plaintiffs
whose office is in Shelton, alleges that on February 5, favor in the amount of the prejudgment remedy sought
1997, pursuant to a finance agreement, it financed the and finds that a prejudgment remedy securing the
sale and subsequent [*2] lease of a large mailing judgment should be granted, the prejudgment remedy
machine, twenty-two feet by sixteen feet, plus accessory

Case 3:03-cv—01014-JBA Document 78-2 Filed 12/16/2004 Page 2 of 4
Page 2
2002 Conn. Super. LEXIS 660, *
applied for shall be granted as requested or as modified C0nn.App. 455, 626 A.2d 307 (1993), as authority for a
by the court." General Statutes § 52—278d(a)(4). plaintiff lessor to recover the lease payments even
though a lessee has a bona fide dispute with a vendor, in
It is axiomatic that "a hearing on an application is not a this case, Pitney Bowes, Inc. This case, which has not
full-scale trial on the merits of the plaintiffs claims . . . been overruled by our Supreme [*6] Court or by the
but rather concems only whether and to what extent the Connecticut Legislature since it was published nine years
plaintiff is entitled to have property of a defendant held ago, nl stands as authority for several propositions: (1)
in custody of the law pending final adjudication of the "A finance lease differs considerably from an ordinary
merits of the action." (Citations omitted; internal lease, which typically involves only a lessor and a lessee,
quotation marks omitted.) Bosco v. Arrowhead by the because it involves an additional party, the equipment
Lake, Inc., 53 C0nn.App. 873, 874, 732 A.2d 205 (1999). supplier or manufacturer. Because the finance lessor is
"The trial comt, vested with broad discretion, [*4] need strictly a financing entity, the lessee ordinarily must look
determine only the likely success of the plaintiffs claim to that additional party for warranty liability." Id., at 465.
by weighing probabilities . . . Civil probable cause (2) "Usually, the [lessor] expects to be paid, even though
constitutes a bona fide belief in the existence of the facts the [product] might prove to be defective or totally
essential under the law for the action and such as would unsuitable for the [lessee's] particular business. Thus, a
warrant a person of ordinary caution, prudence and finance lease is a very different animal from an ordinary
judgment, under the circumstances, in advancing the lease." Quoting l A..l. White & R. Summers, Uniform
action." (Citations omitted; intemal quotation marks Commercial Code (3d Ed. 1988) p. 20; Id., at 466. (3)
omitted.) Tyler v. Schnabel, 34 C0nn.App. 216, 219-20, Again quoting White & Summers, id., p. 25, "If the
641 A.2d 388 (1994); see General Statutes § 52- lessor should order an aircraft which is unsuitable or
278d(a). defective, this is not the lessor's problem. The lessor's
responsibility is merely to provide the money, not to
The plaintiff has demonstrated that it will likely prevail instruct the lessee like a wayward child conceming a
on its claim because it proved that the defendant, as suitable purchase . . . Absent contrary agreement, even if
lessee, signed a finance lease agreement that called for [for example] [*7] our Boeing 747 explodes into small
certain monthly payments, and that the defendant had pieces in flight and is completely uninsured, lessee's
failed to make such payments. The testimony of Cindy obligation to pay continues." 1d., at 468. (4) The various
Cantarera, the recovery manager, who had been provisions of a fmance lease that the defendant
employed by the plaintiff for fifteen years, was very complains of; acceleration of outstanding payments,
credible in this regard. legal fees, costs and interest, disclaimer of and
assignment of warranties, are not unconscionable
The primary defense offered by the defendant is that the "where, as here, the facts and circumstances do not
mailing equipment did not work properly and therefore it indicate any inequality of bargaining power or element
had no obligation to make lease payments to the plaintiff of unfair surprise." Id., at 473.
However, the finance lease agreement between the
rdedddd edd dee dededdede [*51 ¤eedded» emeee edeee nl In teet, ttte casc was referred to just teet
things, that the defendant was obliged to continue to . . . .
make monthly payments to the plaintiff "regardless of year mNewc0i”tC0mmui1lcqtl0nS Fmimce Corp
any dispute with the vendor of the equipment or loss or v` B€St’ Supcuor Coum Judlcml dlsmct of New
d . London, Docket No. 554607 (February 6, 2001)
amage to the equipment or any other reason, you are .
required to pay te.·~ The lease ttttttet provided that the dddeyt, me->· 9ddee Heder d;eeeeeed dee ee
plaintiff made "no warranties, express or implied, Calle? come hcu.Or hlgh Water d°°‘T‘“9 which
regarding any matter, including equipment condition or PmvldcS’ accllldlng to 1 A.'Ji W‘“‘9 & R`
its merchantability or fitness for a particular purpose." Summcm Um Om: Commircla Code (3d Ed`
Both of these two provisions were in capital letters and 1988) p' 20’ that the pamcs can draft a lease
tt tert etttt. Furthermore, the agreement states that tt eeeeeeeede det eeeefedy exdddee Wedeee edd
the plaintiff had "any claims regarding the Equipment or pmmlssmy hablhty of the Hnmice lessor io thc
any other matter arising from your relationship with the lcsscq ami that Set? out what ls knfwm m the
vendor, Pitney Bowes, Inc. ("Vendor") you must make trade as a hcllpr hlgh Water claus? “‘°‘m°1y= a
them against Vendor. We assign to you the Warranty clause that requires the lessee to continue to make
rights we have against Vendor, as stated herein." E? lE;;EEE;;§ tl}; f-?;I:Ea;i;SOrd;;§(;i@:0ui};
- - . . . destroyed." Emlee Equipment, supra, was also
8§$peJZi?L’Itt‘f€. clllf1ierbil;leeTrar1iilv(ihliivlv’llri3riit KS"}? eefeeed Fe de e *999 fedeed eedd deddee dee de
proposition that such hell or high clauses "appear

Case 3:03-cv—01014-JBA Document 78-2 Filed 12/16/2004 Page 3 of 4
Page 3
2002 Comi. Super. LEXIS 660, *
to be uniformly enforced." Leasetec Corp. v. admissible with two exceptions not applicable in this
Orient Systems, 85 F. Supp. 2d 1310,1316 case.
(S.D.Fla. 1999).
[*8] n2 Question: "And where is that original?"
Answer "I can't--I carmot locate it at this point in
The court heard extensive testimony from Luis Escotel, Ugiclit Quesm-m' d Oliaylca? YT; my me Wig;
the vice president of the defendant corporation, and there 2n(;W;r_"?gmII21;ci1m§n tsogccs mr; d isguggg ` 6
is no question that he is an astute and experienced facility ' in Nmwalk Connecticut On Mail
businessman. Mr. Escotel acknowledged that he signed Avenue and those décumems are identified b
the finance agreement on behalf of the defendant, and the boxes Valithnand a number assi ucd and ws H0);
court has no doubt that he knew what he was doing. , g ’ .
the lease number--and they re stored m per bay.
The defendant contends that it has a valid defense against Those documents go back 15 . yCalS' Um’ when
the plaintiff because, begimming at the latest in October wc pulled thc. box to ‘d°““fY It We 1°°k°F’
1998, mn mailing mnnninn nin not work the Wm in tmouzhthc me we bass that Wsyuucs md xt
should have and the vendor was unsuccessful in making Wasnti diag; ?O 1t,s mum? ing Its mlsmei
the machine work properly. The defendant does not Szgcilggd OL;t1i;l;";_icggfilgcugglxzoggdwog
acknowledge that the plaintiff and Pitney Bowes, Inc. are found Ou? the were gmt availablg is gmt
separate companies, with separate directors and officers concctm, Ansvgler ,,That,s comm ,, bucstiolr
and different shareholders. Pitney Bowes, Inc. is the "Oka `And I think our rcvious téstimon Wa;
parent and the plaintiff is a subsidiary. Furthermore, the that tg; that these gocunriems were scameié imo
defendant does not acknowledge that it can pursue any y’ _ . h . h 9,, A ,,Th ,
breach of warranty claims it has against Pitney Bowes, your SyStcm’ ls t it Hg t',, nswcr Gym
Inc., which manufactured and sold the allegedly Scanned On a laser prmtcn ` '
defective product to the defendant. The defendant also [*11]
does not acknowledge that it voluntarily signed an
;§;$;c; @S;`;hiEr1gl1$);I;;i(gE>L fig;"1;t§;ct?§la$£?;nF,@ T; The other defenses of failure of consideration, fraudulent
equipment derlccts misrepresentations, timely rejection of the equipment and
' unconscionability do not apply to this case because it
The defendant asserted several other defenses to the mllolves ll Hmmm kms? These Smile arguments. were
plaintiffs application for a prejudgment remedy, none of wict;1 m fmlee .Equlp7em Leasmg3f(gp0nZl0n V}
which are persuasive. The first is that the application by 45;e;€L;g1s€r?:sf¥;;i;;"lCa;g"iSS';p;; diffczggi ggingl
the plaintiff for such a remedy did not include certain fmliq an Ordinar lease ,, y
words relating to defenses, counterclaims and set-offs y `
Einiiiiiiii ii TnéiciiiiiiliiinAig`§E$£i§i€sZnn"ZZiSn"§§Z Based OH the fs>¤—=g¤i¤$· the plmiffhas Shown probable
considered every defense nrinmni by im defendant in the ¤W1“¤m*—.Of mdlscwyanda
arriving at its conclusion that the plaintiff is entitled to a fun hcarmg On lhs m€mS’ a different icsult mlghiwiu
feud mem rcmcd in the amount indicated ensue, but, at this stage of the proceedings, the plaintiff
p J g y has adequately demonstrated probable cause that it will
A second defense was that the plaintiff was unable to pr?/a1l’ mtwlthstandlpg the dcfcnsgs Offered by the
produce the original lease but only a copy, and therefore dc Clfcmit TliuS’ gprcjudgmcm rcmc y of attachment gr
that the so—called "best evidence" rule had been violated. gums f ist H; tifgmguifaof S 80,:190 {H?] Issue
This argument is not persuasive because the recovery fglmshg dcfinfzigxz go; The c;r;§O\"£u;ngPt;; Zigi;
manager for the plaintiff testified that the original lease . . . . g
could not be located despite her efforts to do so. n2 In niachmg appmxlmatcly S 20,090- Whlch was ultmmtcly
any event, as was stated in Brookfield v. Candlewood plckcdpp from the defendant m the summer of 200l’
Shores Estates, Inc., 201 Conn. 1, 12, 513 A.2d 1218 ilppmxmmtcly four years after the machmc was mst
(1986), nthe best evidence mk: at common law is a mstalled at the defendant's place of business. [*12]
preferential, rather than an exclusionary rule." Moreover,
the Connecticut Code of Evidence (effective January 1, n3 This amount is based on the court's
2000) [*10] § 10-2, provides that a copy of a writing is estimate of the approximate amount of damages,
but does not include attomeys fees, court costs, or

Case 3:03-cv-01014-JBA Document 78-2 Filed 12/16/2004 Page 4 of 4
Page 4
2002 Conn. Super. LEXIS 660, *
interest to which the plaintiff is entitled under the
terms of the lease. These items may be calculated Dated at Stamford, Connecticut, this 7th day of March
at the time of trial if they are applicable. 2002.
William B. Lewis, Judge
So Ordered.